Posts tagged ‘recession’

June 9, 2012

How Much is a Bequest Commitment Worth?

A charitable bequest commitment has tremendous value for the organization receiving it. The value may be even greater than you realize. Bequest commitments are valuable in three important ways:

 

1.  Future Money

For donors, a charitable bequest commitment is an easy painless way to give. It’s a way even middle-class donors can be “major donors.” While most people cannot afford to make a huge cash gift to a nonprofit they love, most can make substantial gifts upon death. This is particularly important during economic hard or uncertain times. A bequest commitment allows donors to show their significant support for their favorite charities without having to deplete current cash resources.

For nonprofit organizations, bequests allow more money to flow into the organization than would otherwise be the case. And, the organization will not even necessarily need to wait decades for the donor to die and for the gift to be realized. Depending on the age and health of the donor, the bequest gift might be realized in a surprisingly short time period.

Many people have tried to estimate the value of the average bequest gift in the US. I’ve seen a range of numbers used. The consensus figure I used in my book, Donor-Centered Planned Gift Marketing, is $35,000. However, that’s not a particularly useful figure since there is such a massive range in the size of actual bequest gifts that individuals make.

So, researcher Russell N. James, III, JD, PhD, CFP®, Director of Graduate Studies in Charitable Planning at Texas Tech University, looked at how bequest giving compares with annual giving. In his AFP International Conference presentation, “The Presence and Timing of Charitable Estate Planning: New Research Findings,” James revealed the following about Americans over the age of 50:

 

 Total Estate Value

Annual Giving Multiple  

 < $100,000

0.15  

 $100,000 – < $500,000

1.89  

 $500,000 – < $1,000,000

3.73  

 $1,000,000 – < $5,000,000

8.12  

 $5,000,000+

11.65  

 TOTAL

5.07  

 

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March 2, 2012

The World Giving Index Reveals Good & Bad News

As a result of continued worldwide economic turmoil in 2011, the news about giving around the globe is mixed:

 

  • The good news is that the world gave more in 2011 than it did in 2010, taking into account money donated, volunteerism, and helping a stranger.

 

  • The bad news is that the number of people donating money worldwide has gone down. The overall increase in giving came from the increase in volunteerism and helping a stranger.

 

  • The news for Americans is very good. The United States moved from a fifth place ranking in 2010 to the top spot in 2011 making it “the world’s most giving nation.”

 

  • The news is also good for Asians. As a region, Asia has seen the largest growth in overall giving.

 

World Giving Index 2011 -- Map with Country Rank

 

These insights come from the World Giving Index 2011, published recently by The Charities Aid Foundation, an international charity based in the United Kingdom. The report, compiled from survey data provided by Gallup, ranks charitable behavior in 153 nations. The ranking is based on three measures:

Have you done any of the following in the past month?:

  • Donated money to a charity?
  • Volunteered your time to an organisation?
  • Helped a stranger, or someone you didn’t know who needed help?”

The global average of the three giving behaviors in 2011 was 32.4 percent, up from 31.6 percent in 2010. More specifically, there has been a two percent increase in the global population “Helping a Stranger” and a one percent increase in people “Volunteering.” Unfortunately, the sluggish worldwide economy might be to blame for a one percent decrease in the number of people who gave money to a charity.

In 2011, the top ten most giving countries were:

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January 13, 2012

Enter Now to Win a Free Planned-Giving Book

I always find January to be a bit of a let-down. By contrast, December is very festive with Chanukah, Christmas, Kwanzaa, Festivus, and New Year’s Eve. But January? January is dark, cold, and filled with post-holiday malaise.

So, I thought I would do something to bring a bit of fun into January.

In honor of the Martin Luther King, Jr. National Day of Service (January 16), publisher John Wiley & Sons and I will be giving away one free copy of my book, Donor-Centered Planned Gift Marketing.

MLK Day recognizes the birth of King while encouraging citizen action. Many in the nonprofit sector have embraced this day to promote volunteerism. Since my book helps nonprofit organizations secure much needed resources, I thought a planned-giving book give-away would be just one small thing I could do at this special time of year.

In a moment, I’ll tell you how you can enter to win. First, I want to say that I think planned giving is a very attractive way for individuals to support favorite charities, especially during challenging economic times.

A few years back, I was trying to explain to my oldest, childless aunt what it is I do for a living. I tried explaining planned giving. Grasping what I was saying, she asked, “Why on Earth would someone give to a charity after they’re dead?” I asked her, “What charities do you support now?” Among the organizations she supports is an animal welfare group. I then asked, “Who’s going to take care of the little puppies and kittens after you’re no longer here to keep writing checks?” Her eyes widened and, in that moment, I think I might have lost my inheritance.

Planned giving allows people to continue to support organizations they are passionate about after they are no longer here to keep writing checks. In addition, planned giving may help donors lower their taxes, pass money and property on to heirs in an efficient way, generate an income, or provide major gifts to organizations without making any sacrifice during their lifetime. All of these benefits of planned giving are magnified during challenging economic times.

For these reasons, among others, I strongly believe that now is a great time to talk with people about gift planning. Today, given economic uncertainty, individuals might be uncomfortable making a significant financial gift out of current cash. However, those same individuals might be perfectly willing to provide some type of deferred contribution or life-income gift.

Only 22 percent of Americans over the age of 30 say they have been approached by a nonprofit organization to consider a planned gift, according to a survey by the Stelter Company. Imagine how much more revenue would be generated if more nonprofit organizations asked more people for a planned gift.

Now, let me tell you how to enter the book give-away.

For your chance to win a free copy of Donor-Centered Planned Gift Marketing, simply comment below.

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November 21, 2011

Special Report: “Supercommittee” Fails!

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

The Congressional Joint Select Committee on Deficit Reduction, the so-called Supercommittee, announced that it will fail to reach a bi-partisan deficit reduction deal by the established deadline. The Committee issued a statement on November 21, 2011.

The failure of the Supercommittee leaves many questions unanswered for the nation, in general. It also leaves many open questions where the nonprofit sector is concerned:

  • Will Congress allow the Bush Tax Cuts to expire next year? How will that impact charitable giving?
  • Will Congress tinker with the charitable giving tax deduction? Both Democrats and Republicans on the Supercommittee have expressed a willingness to reduce, in some way, the charitable giving tax deduction. So, what will Congress ultimately do and how will that impact giving?
  • How will Congress’ failure to reduce the deficit impact the stock market and the overall economy? Today, the Dow fell 248.85 points (-2.11 percent) while the NASDAQ dropped 49.36 points  (-1.92 percent). How will this ultimately impact philanthropy?

One thing is certain: When it comes to tax rates, tax deductions, the stock market, and the economy, uncertainty is likely to remain at least until the 2012 election. This will obviously create challenges for all Americans. However, it will continue to present unique challenges to everyone involved in the philanthropic planning process.

The Supercommittee has done the nation a massive, bi-partisan disservice by failing to do its job. If there were a shred of honor left in Washington, DC, every member of the Supercommittee would resign. The Supercommittee is not looking very “super” at the moment.

That’s what Michael Rosen says… What do you say?

October 14, 2011

Fundraiser Becomes Charity Recipient and Gains Renewed Perspective

These are tough economic times. Everyone knows this. Many who work in the nonprofit sector have seen the demand for services increase greatly during these challenging times. But, we have experienced events as nonprofit managers, development professionals, volunteer leaders, professional advisors, or consultants. Recently, I heard from one of my readers who has a different perspective. S/he is a development professional who lost her/his job and is now a recipient of charity services. It’s a bit like the Hollywood cliché of a doctor who is suddenly struck by an illness and learns what it’s really like to be a patient.

On this blog site, I’ve written from the perspective of the development professional. I’ve even written from the perspective of the donor. However, until now, I’ve never posted anything from the perspective of the recipient of a nonprofit organization’s services. So, I invited my reader to share her/his thoughts from her/his special perspective. For reasons that will become obvious, I am protecting the writer’s identity, even going to the point of confusing the pronouns. I hope you appreciate the insight:

 

The truth is I’m just another statistic.

I am an experienced fundraiser who has worked for a few organizations over the last decade. I have had major successes and yes, like everyone else, some failures. I enjoyed my work — knowing that the funds I raised were going to help people who were poorer than I, less educated than I and, in general, did not have the opportunities I did.

And then I lost my job. Yup, a gut puncher if ever there was one.

But rather than dwell on the negative, I saw it as an opportunity. You never know what lies over the horizon.

My biggest problem was how to support my family. Nonprofit salaries are not, shall we say, going to get me on Robin Leach’s Lifestyles of the Rich & Famous (remember that show?). We had no savings and pressure was on to find a job quickly.

That didn’t happen.

Instead, things got very tight in a hurry. The little unemployment compensation I could collect did not pay the bills. I can’t go to friends since they’re maxed out and have their own issues. Family? Forget it. So now, we scramble to find who to turn to.

In our community, there is a Free Loan Society. This society helps families who are having financial troubles and need a little “breathing room” for a few months. The amount isn’t that much, a max of $500 per month. But, if it helps with food shopping…

We had a very tough decision to make. I have always worked in nonprofits and money has always been an issue, but we never took charity. And yet, now we were faced with unpaid bills, mortgage payments and everything that millions of jobless people face daily.

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August 12, 2011

3 Ways for Nonprofits to Crash & Burn in Current Economy

This week, I was all set to write my blog post. But then, an article at The Chronicle of Philanthropy website caught my attention: “How a Double-Dip Recession Could Affect Giving” by Lisa Chiu. It was a fine article, but it was nevertheless the last straw. I’ve seen way too many articles, blog posts, and Tweets exploring the “What’s going to happen?” question. I have to respond. And, I have to share some meaningful suggestions.

There’s really no mystery. It’s quite simple. I’ll tell you what will happen if there’s a double-dip recession or, for that matter, if the economy improves. Overall philanthropy will follow the growth trend of the Gross Domestic Product. Philanthropy has long correlated to GDP. It averages about two percent of GDP. So, if GDP goes down, giving will go down. If GDP grows modestly, philanthropy will grow modestly. If a miracle happens sometime soon and GDP growth leaps upward, so will giving. We don’t need more studies. We don’t need to guess. We already know what will happen.

Photo by inajeep via Flickr

While philanthropic performance is easily predicted, what is more difficult to determine is how individual nonprofit organizations will do in a bad economy. Since we are nearly powerless to alter the course of the economy, we need to focus our efforts on controlling the thing we can, well, control rather than behaving like a deer caught in the headlights. While I cannot provide a plan that will guarantee success, allow me to share three things that can guarantee that your nonprofit organization will crash and burn during a poor economy:

Stop Asking. It may seem obvious that you should never stop asking, but some nonprofit organizations really do think that the current economic conditions are not good for going out and soliciting money. So, they have scaled back their fundraising efforts. The Vancouver Symphony Orchestra (in Washington state), left their Director of Development position open for a year. They ended up on the verge of bankruptcy. If you ask for contributions, you may not get them. But, if you don’t ask, you certainly won’t get them. Ok, maybe you’ll get a few, but you won’t raise nearly as much money as if you get out and ask.

Do Not Have a Compelling Case for Support. If you’re going to ask people for money, particularly folks who might be struggling themselves, you better have a superb case for support. Just showing up and saying, “Hi, I’m here. Give me money,” might work in good times, though it’s still not a particularly effective idea. But, in these tough economic times, you’ll need to do better. So, get back to basics. Examine your case for support and make it stronger. If you don’t have one, create one. Tell prospective donors how you have wisely used previous contributions and what you intend to do with new dollars. Identify a problem and show prospective donors how they are part of the solution.

Ignore Current Supporters. To save money, some organizations are cutting their stewardship budgets. This is a great way to alienate and lose supporters at a time when you can least afford to do so. During the recession of the 1980s, I had a museum client with a senior executive who wanted to eliminate the member magazine to cut costs. Before doing that, the wise membership director and I put together a member survey to determine whether the membership valued the magazine or not and what, if anything, they valued in particular. We found that the magazine was an important member benefit, even among those who couldn’t remember any of the articles from the most recent issue. The most valued feature of the magazine was the listing of upcoming events. As a result of the survey, the membership department redesigned the magazine with a special pull-out calendar rather than a simple event listing. A follow-up survey found that members valued the publication even more. The membership retention rate even went up! And, yes, the great powers allowed the magazine to continue. In a bad economy, it is time to take especially good care of supporters. It is not the time to alienate them.

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